Why Is Real Estate In Utah So Expensive?

Written By:

Post Publish Date -Updated::

I have been checking the rates for Utah Real Estate the last few years and have been shocked, like many people, by what some houses are going for in certain areas.

Utah’s real estate is expensive due to the supply and demand economic principle. Housing prices have risen so high over the last few years that most people cannot afford to buy a house in Utah, especially if they earn just the average or even above-average wage.

Table of Contents

Utah Real Estate And The Supply And Demand Principle

Utah is one of the states in the West that continues to have record-breaking housing price increases. Many experts predict this can cause a severe imbalance in the housing market.

In Utah, housing prices have increased so much that half of the Utah state households can not afford the median housing price in Utah.

The reason is the supply and demand principle of economics. Supply and demand of economics is a fundamental economic principle that affects prices. When the demand is high, and there is not enough supply, this will drive up the prices.

The principle of supply and demand is not as simple as it seems since, when the price goes up, demand will decrease as fewer people can afford the set prices.

This could happen in the state of Utah. Utah real estate prices could get so high that few people can afford the costs.

Also, if the supply goes up as there is a lot of new construction, so suddenly people have more choices, the price could fall.

Here are a few basic principles of supply and demand that could happen with the Utah housing market:

These fundamental economic principles could happen to Utah or any housing market. As supply and demand change, so can housing prices.

On the other hand, there also comes a time when prices are so high that people who want to live in Utah may not be able to afford it unless wages and salaries in Utah increase to keep pace with the housing market.

Utah Real Estate Examples and Reality

Take, for example, a home in Provo, Utah, which is not even Salt Lake City. This house is four bedrooms, two bathrooms, and 2,740 square feet. In 2001 this house was accessed for taxes at 180,429 USD. Today the asking price for the same house is 725,000 USD.

Graph from Zillow showing a home for sale in Provo and the increase in prices over the years.

Most people do not realize that the taxes also went up significantly with the increase, so the person who buys that house will end up paying far more in taxes today than in 2001.

Tax assessment for the same home, also from Zillow Now tax accessed value, is about 650,000 USD, significantly increasing the tax rate.

A house that maybe you would have had a monthly cost of 1,500 USD per month ins 2001 will now cost you over 3,400 USD per month to keep your home and be able to pay a standard mortgage.

The housing costs do not include other things such as electricity, water, telephone, internet, and cable television which most Americans consider to be a standard part of living.

Today, this same house has a monthly rental value of about 2,300 USD. This means the cost you pay for it today; you may not be able to cover your rent each month if you decide to buy it for a rental property without paying out a large deposit, so your mortgage is not so high.

That is a massive increase by any standard and means it will be harder for people to enter the housing market, especially if this increases. It also means many in Utah cannot afford to continue to live in Utah if they sell their houses and try to buy a new home.

Utah Wages and Living Costs

I find it interesting that Utah wages are not increasing to cover these increased costs for the housing market, and the question is if they will increase or remain the same.

The more expensive Utah wages become, companies may start looking for locations and places without high costs and salaries. There must be an economic reason why companies would pay more wages than other locations.

Here are some basics as to what the wages are now in Utah. As with everything else, some people are earning more, and others are earning less than this amount:

Annual SalaryHourly Wage
Top Earners $83,225$40
75th Percentile$68,429$33
Average $55,840$27
25th Percentile $45,773$22
Average Wages State of Utah 2022

This is lower than a state like California, which would have an average of $62,356, meaning that California’s average wage is closer to the top 75% of earners in Utah. If you are a Californian and can work remotely, you move to Utah, you may find Utah housing and living much cheaper than in many parts of California.

The average wage in Utah is right about the US average national salary, which is $55,629. This tells us that wages in Utah are right at the US national average.

The median price for homes in the United States is at an all-time high of about 350,000 USD. In Utah, the average cost of home prices is $486,000.

The danger is that if wages do not increase to compensate for these increases in home prices, the dream for most Americans to own and have their own home will not be possible.

And this will be especially true in Utah, which is on the national average for wages but on the high side for home prices. Here is what we learn from these statistics:

But If you are a Utah resident earning the average Utah pay, you may find the cost of housing in Utah extraordinarily high and, in many cases, out of your price range.

In reality, if you have a large family and you earned the average in Utah and wanted to buy that house for your large family today, almost 64% of your salary would go towards your home, which would not leave you very much at the end of the month for many other expenses.

You probably will not be able to afford your home and will need to move to a much smaller house and property. Even those considered top earners in Utah would be spending, on average, at least 50% of their income on housing, which would put them over the national average.

In America, housing accounts for 37% of the average American budget, with the standard measure being 30% of their pretax income.

The 30% is the ideal, but most Americans spend over 50% of their income on housing. In Utah, where housing is higher, most Utah residents pay at least 50% of their incomes for housing.

I spend a lot of time studying real estate in Utah, and I am shocked by the state’s housing cost, especially when compared to the salary levels. To see the enormous increase, you have to wonder when and how it will end or it will start to see a decrease as more people can not afford housing in Utah.

Being house rich is a good thing, but if you sell your home to move into a new house in Utah, the truth is that most people in Utah cannot afford to move. The housing market continues to be too high for most people to be able to live and afford a home on their present wage.

Real Estate Crunch gives you real property and real estate information and advice. We offer a free monthly newsletter; you can sign up for our newsletter by clicking here.

We also have a weekly podcast called “Real Estate Crunch,” found on all major podcast platforms. Listen to our podcast by clicking here.

Follow us on our social media platforms – Facebook and Instagram.

Frequently Asked Questions

Why have Utah’s real estate prices increased so significantly in recent years?

The increase in Utah’s real estate prices can be attributed to a combination of factors, including population growth, limited housing supply, and increased demand due to economic opportunities and quality of life.

How does population growth contribute to the high cost of real estate in Utah?

Utah has experienced substantial population growth in recent years, driven by factors such as job opportunities, a strong economy, and a desirable lifestyle. This growth has led to higher demand for housing, putting upward pressure on prices.

Is the limited housing supply a major factor in Utah’s expensive real estate market?

Yes, the limited availability of housing units is a significant factor in the high prices. Factors like zoning regulations, land scarcity, and construction costs have restricted the pace of new housing development, exacerbating the supply-demand imbalance.

Are there specific areas in Utah where real estate prices are particularly high?

Yes, areas with strong job markets, good schools, and attractive amenities, such as Salt Lake City and its surrounding suburbs, tend to have higher real estate prices compared to more rural or less desirable areas.

How does the average wage in Utah impact the ability to afford real estate?

The average wage in Utah may not keep pace with the rapid increase in housing prices. This disparity between income and home prices can make it challenging for many residents to afford to buy a home.

Are there any government policies addressing the issue of expensive real estate in Utah?

Various local and state governments in Utah have been working on policies to increase housing supply, provide affordable housing options, and promote responsible urban development. However, the impact of these policies takes time to materialize.

Is real estate speculation contributing to the rising prices in Utah?

Real estate speculation, where investors buy properties with the expectation of price appreciation, can contribute to price increases. In areas with high demand, speculators can drive up prices further.

Are there any external factors beyond Utah’s control that impact its real estate prices?

Factors such as national economic trends, mortgage interest rates, and changes in consumer preferences can influence real estate prices in Utah, just as they do in other regions.

How do Utah’s natural beauty and recreational opportunities affect real estate prices?

Utah’s stunning landscapes, national parks, and outdoor activities attract both residents and tourists. This demand for proximity to recreational opportunities can contribute to higher real estate prices, especially in areas close to these attractions.

How Hard Is The Utah Real Estate Exam?

Utah’s real estate is expensive due to the supply and demand economic principle. Housing prices have risen so high over the last few years that most people cannot afford to buy a house in Utah, especially if they earn just the average or even above-average wage.

By clicking here, you can read more about How Hard Is The Utah Real Estate Exam?

The Real Estate Bundle Of Rights Explained

A bundle of rights is your right as a property owner. It is all your rights to your property as the rightful and outright owner. It is essential to understand these rates and understand if you’re full access to all your rights or if there may be HOA or local laws that may put exceptions onto your bundle of rights.

By clicking here, you can read more about The Real Estate Bundle Of Rights Explained.

Anita Hummel
Follow Me

Share Our Blogs On Social Media